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Brexit And The US

It’s official – UK voters have chosen to take themselves out of the European Community and to resume taking responsibility for their own economic fate.

Predictably, world markets, as well as the Pound and Euro, have reacted with irrational fear. I expect that it won’t be long before all these markets’ participants realize that the world hasn’t ended. At least a major part of today’s panic likely will be reversed, possibly as early as Monday.

The actual exit of the UK from the EC will take upwards of two years to become final. A lot can happen in that time. A lot of the UK’s potential benefit from Brexit can be negotiated away or legislated away.

The big benefit that I see is the hundreds of thousands of pages of EC regulations no longer applying – no longer impoverishing – the people of the UK. However, it is far from unlikely that some UK legislators are petrified at the prospects of the Freedom – they may try to legislatively protect their Economy from “suffering the full benefits.”

With the influence of the more socialistic Labour Party waning, and that of the more Free Market UKIP, I am hopeful that the UK miracle (in the sense of the German miracle after WWII) will not be more than marginally slowed down.

(Before & After the German Miracle)

A UK miracle, by the way, would be the scariest result from the point of view of the One-Europe (and One-World) crowd. Certainly, if Brexit is followed by an explosion of UK investment and growth in their GDP, then the EC alliance, which never should have happened and which even now is shaking apart, likely will not survive for much longer.

Despite all the rhetoric of the UK suffering from the loss of trade deals with EC members, trade expansion is a likely result of Brexit. Within the EC, the UK has been running a trade deficit – the UK has imported much more from its EC mates than it has exported. The EC would want that to continue.

But, where the EC has prevented the UK from signing trade deals with other countries, with Brexit that obstacle has been removed. Where it is to the UK’s advantage to sign trade deals, it will. Where trade deals are unnecessary – where a piece of paper makes no difference, then the UK will not sign any trade pact.

Where freedom from Brussels’ obstacles to GDP growth allow – most of the UK Economy – new opportunities for entrepreneurs will be capitalized on. In the process, tens and hundreds of thousands of new jobs will be created. Because of more demand for workers, wages will rise.

Because the new and existing businesses seizing these new opportunities will be making production more efficient, UK prices are likely to fall. UK workers will benefit from this double whammy of growth – more Pounds in their pockets with each Pound worth more.

So, how will this affect us here in the US? US businesses have been suffering mightily – and increasingly – under the yoke of regulations and other stupid policy coming out of Washington, DC. Those who are paying attention see that our Economy has been in Recession for a generation, under both socialist Democrats as well as liberal/NeoCon Republicans.

They see that the numbers coming out of DC – on CPI, on Unemployment, and on GDP – are showing laughable results compared to reality. Actual CPI, as measured the way it used to be calculated in 1980, is closer to 8% rather than 2%. Not counting people who have given up hope of finding a job as unemployed? Disgraceful!

A Clinton Presidency would continue the US Economic downward spiral, while a Trump Presidency may be unable to cause any significant turnaround.

A surge in the UK Economy, with its miracle improvement in UK workers’ well-being, following Brexit, would not go unnoticed in the US. Cause and effect would be so obvious that I see a good chance that a DCexit movement will get underway.

DCexit would not call for states to leave the US. Instead, DCexit would demand that the federal government live up to its Constitutional limits. The result will be a decided movement in the US to a much smaller, fiscally prudent federal government. Lower taxes, less regulation, paying off the National Debt, less corruption, and less socialism. Big Time!

Before you automatically discount this possibility, let’s see what comes out of Brexit for the UK, and what happens during US elections in 2018 and 2020.

Robert (Bob) Shapiro is self-taught in Austrian Economics and has consulted briefly for the governments of Mexico, Greece, Portugal and Spain. He has traded Gold & Silver and their stocks since 1970. Bob Shapiro’s blog is http://us-issues.com